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ECB keeps policy, guidance unchanged

LiveMint 07-09-2017Balazs Koranyi

Frankfurt: The European Central Bank (ECB) reaffirmed its ultra-easy policy stance on Thursday, even keeping the door open to increasing bond purchases if needed, despite the euro zone’s best economic run since the global financial crisis.

The ECB kept rates at record lows, confirmed that asset purchases would continue at 60 billion euros per month at least until December, and said it could even expand or extend the bond buys, defying some expectations for policymakers to drop a reference to bigger bond purchases.

“If the outlook becomes less favourable, or if financial conditions become inconsistent with further progress towards a sustained adjustment in the path of inflation, the governing council stands ready to increase the programme in terms of size and/or duration,” the ECB said in a statement.

Investors have been looking for hints that the ECB will start clawing back stimulus from next year and many saw the guidance as the most obvious place to send the first signal.

The ECB also kept its rate on bank overnight deposits, which is currently its primary interest rate tool, at -0.40%, as expected.

The main refinancing rate, which determines the cost of credit in the economy, was unchanged at 0.00% while the rate on the marginal lending facility — the emergency overnight borrowing rate for banks — remains at 0.25%.

Attention now turns to ECB President Mario Draghi’s press conference, due to start at 6.00pm, during which he will detail the euro zone central bank’s latest economic projections and may provide hints about future policy. Reuters